Administrative or Clinical Decision?

How one physician clashed with his hospital employer over his ED choices.

If you are an employed physician, your contract probably states your employer will not interfere with your exercise of clinical judgment in providing medical care. Typical language in hospital-physician employment contracts include: “Hospital shall not interfere with physician’s exercise of clinical medical judgment in her medical practice.”

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Most corporate employers, including hospitals, put this language in physician employment agreements in an effort to avoid violating the prohibition of the corporate practice of medicine (CPOM). This article will describe a case I litigated in which an employed physician challenged his “for cause” termination as unlawful interference with his exercise of clinical judgment.

The prohibition against the CPOM means non-physician, corporate entities, cannot own a medical practice; employing physicians to provide the care while the corporation collects the fees. This safeguards against the risk of non-physician managers making decisions that maximize profits at the expense of quality medical care.

For example, a corporate entity that owns/manages a medical practice may insist each physician see four patients an hour even if the physicians feel this impedes their ability to provide safe, thorough and compassionate care. The decision on whether to allow CPOM varies among different states. https://www.nhpco.org/sites/default/files/public/palliativecare/corporate-practice-of-medicine-50-state-summary.pdf. Illinois’ prohibition of the CPOM was modified by its Supreme Court decision in the 1997 case of Berlin v. Sarah Lincoln Bush Health Center[1]. In the Berlin case, a physician challenged the enforceability of his hospital employment contract. The physician argued the contract was void because, under Illinois law, a corporate entity was prohibited by the CPOM doctrine from employing physicians. Based on previous decisions, the lower courts agreed with the physician.

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However, the Illinois Supreme Court held the CPOM doctrine did not prohibit a licensed hospital from employing physicians. The Court re-stated the concerns inherent in lay corporations employing physicians. These concerns include the divided loyalty an employed physician would experience, between the pecuniary interest of the corporate employer and the best interest of the patient. However, in Berlin, the Court ruled these concerns don’t seem applicable to a licensed hospital stating: “The concern for lay control over professional judgment is alleviated in a licensed hospital, where generally a separate professional medical staff is responsible for the quality of medical services rendered in the facility.”[2].

While the Illinois Supreme Court felt it unlikely a licensed hospital would interfere with a physician’s exercise of clinical judgment, the legislature was less certain. In 2001, the Illinois legislature amended the Hospital Licensing Act (IHA) with a provision that required an employing hospital to include language in its physician employment contracts stating it would not unreasonably interfere with the physician’s exercise of professional medical judgment[3]. The IHA was amended as a response to the Berlin decision. The amendment was supported by the Illinois State Medical Society and the Illinois Hospital Association so there was very little debate. This protection has substantial teeth as the physician was given the right to sue for damages, including back pay and re-instatement if he was terminated.

The important issue that needed to be determined under the statute was what administrative actions would be deemed to unreasonably interfere with the employed physician’s exercise of clinical judgment? Usually it is case law that fills in the details lacking in statutes. However, at the time of Dr. EP’s case, there were no Illinois appellate decisions determining what administrative actions unreasonably interfere with the exercise of clinical judgment. Surprisingly, I could not find a reported appellate decision on these issues in any US jurisdiction.

On Dec. 29, 2011, Dr. EP received a registered letter from his hospital employer stating he was being terminated immediately “for cause.” The triggering event for the termination was Dr. EP’s evaluation and treatment of a hospital employee without having her registered as an emergency department patient. The hospital also cited another instance of Dr. EP treating a patient who had not been registered in the emergency department. Patient Doe was a hospital employee who developed abdominal pain while at work. Dr. EP was an emergency physician who also served as the hospital’s employee health physician. He had treated patient Doe in the past and, in fact, she had a follow-up appointment scheduled with Dr. EP that month. For privacy and financial reasons, patient Doe told Dr. EP she preferred an outpatient work-up rather than register as an ED patient. Dr. EP ordered a CT and provided medically appropriate outpatient follow-up.

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Dr. EP contested the termination of his employment and hospital privileges as an improper interference by the hospital with his exercise of professional judgment. He asserted that the decision to evaluate and treat a person as an outpatient rather than through the emergency department requires professional medical judgment. Certainly a non-clinical hospital administrator could not determine if a patient’s request to pursue an outpatient evaluation was clinically appropriate. However, the hospital argued Dr. EP’s failure to require the patient to register in the emergency department, while seeking his advice, was a breach of administrative policies. The hospital accurately pointed out that Dr. EP was on-duty as the ED physician at the time he was approached by patient Doe. These issues were litigated in the following case, which ultimately settled before trial.

The hospital’s “for cause” termination letter characterized Dr. EP’s evaluation and treatment of patient Doe, without having her registered as an ED patient, as misconduct that was injurious to the hospital. Dr. EP countered that he simply applied his medical judgment in determining that patient Doe’s desire for an outpatient work-up was medically safe. This determination required medical judgment and, in fact, is a decision on-call physicians make on a regular basis. He pointed out that she was registered (and the hospital billed for) the CT scan. Moreover, while the hospital missed out on the revenue it might have captured had patient Doe registered in the ED, Dr. EP had a legal obligation to the patient requiring him to put her needs above his own (and his hospital employer’s) pecuniary interest.

The amended Illinois Hospital Licensing Act requires an employing hospital to give the physician a hearing whenever the physician feels the hospital is unreasonably interfering with his exercise of professional judgment. Dr. EP requested a hearing to determine if the hospital’s termination of his employment and hospital privileges constituted an unreasonable interference with his exercise of professional medical judgment. The hospital initially refused the requested hearing, based on its conclusion Dr. EP’s termination was not based on his exercise of professional judgment, but rather was administrative in nature. However, the hospital agreed to the hearing several months later, after Dr. EP filed a complaint with the Illinois Department of Public Health (IDPH) and initiated a lawsuit[4] seeking damages, including reinstatement. To my knowledge, this was the first litigated case in Illinois seeking to use the 2001 amendment to the Illinois Hospital Licensing Act as a means of protecting an employed physician’s right to be free from unreasonable interference in the exercise of clinical judgment.[5]

Dr. EP and the hospital agreed to a panel of three independent physicians chosen from a list provided by the Illinois College of Emergency Physicians. However, the case was amicably settled just before the hearing. As part of the settlement, the hospital rescinded it termination letter. Dr. EP is back on staff at the hospital, currently working with a private medical group. The remaining terms of the settlement are confidential.

What do you think? Was Dr. EP’s evaluation and treatment of patient Doe a legitimate exercise of clinical judgment or was it misconduct meriting “for cause” termination? Have you experienced administrative interference with your exercise of clinical judgment? If so, how?

Joseph P. Wood, Esq., MD is a practicing attorney licensed in Illinois and Arizona. He is the author/editor of “Contract Issues for Emergency Physicians” published by the Emergency Medicine Resident’s Association. He has successfully litigated on behalf of emergency physicians who have been wrongfully terminated by their hospital employer.

1 Comment

I think it depends on how the CT scanner was typically used / available. If it was a dedicate device (24/7 available for ED emergencies only), then I don’t think he acted appropriately. If on the other hand, the CT scanner was a shared resource available for outpatient and emergency use, then Dr EP’s actions were more justifiable.

“I was entranced by an essay in Emergency Physicians Monthly . . . If you want to know what professional craftsmanship looks like, this is it. ”

-David Brooks, New York Times Op/Ed Editor

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